Were packaged chips, pretzels, nuts, crackers, cookies, and popcorn sold through a charitable gift shop subject to Florida sales tax?

Subject

Sales of Potato Chips, Pretzels, and Other Snack Items Through a Gift Shop

Plain-English summary

Ordinary packaged chips, pretzels, peanuts, crackers, and non-coated cookies were exempt when sold through the qualifying gift shop. The shop was not a restaurant, cafeteria, or similarly licensed establishment, so the Department treated it like a grocery seller for those items.

Candy, granola bars, chocolate- or candy-coated snacks, honey-roasted nuts, caramel popcorn, and popcorn popped on the seller's premises were taxable. Vending-machine sales were also taxable. The separate hospital exemption for patient meals did not convert taxable gift-shop snacks into exempt food.

What this means for you

The product's form and the seller's operation both mattered. Charitable status and use of proceeds did not create a blanket exemption for every gift-shop sale.

Common questions

Were plain packaged chips and pretzels exempt? Yes.

Was caramel or freshly popped popcorn exempt? No.

Did patient purchases qualify for the hospital meal exemption? Not merely because the buyer was a patient.

Citations and references

• Fla. Stat. §§ 212.0515, 212.08(2), and 213.22
• Fla. Admin. Code r. 12A-1.011(1), (3), (5), and (22)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94A-033

Original ruling text

May 18, 1994

Re: TAA 94A-033
Sales Tax; Sales of Potato Chips, Pretzels, and Other Snack
Items Through a Gift Shop
Section 212.08(2), F.S.
Rule 12A-1.011, F.A.C.

Dear :

Thank you for your request for a Technical Assistance
Advisement dated February 9, 1994, on the above referenced
issue. As presented in your letter, it is your contention that
certain sales of food items made through XXX [hereinafter
"Client"] gift shop are not taxable pursuant to Rule 12A1.011(1)(a) and (22)(a), F.A.C. Your request provides in
pertinent part:

"Client' is a charitable organization that is qualified for exemption pursuant to Section 501(c)(3) of the Internal Revenue Code of 1986....Client' has been issued a Certificate
of Tax Exemption by the Florida Department of Revenue....

"Client' operates a gift shop that sells candy, cookies, potato chips, peanuts, pretzels, soft drinks and other snack items as well as magazines and small gift items. The gift shop is staffed by volunteers. A professional business manager will soon be hired, in part, to make certain that the gift shop is in full compliance with all of its tax reporting, collection and remittance obligations. All of the net proceeds from the gift shop operations are paid over to theClient's' separate
charitable foundation, and used to support the development of
new medical, educational and research programs and to upgrade
the facilities of `Client' and to further the medical research
objectives of the foundation.

"The gift shop sells food items to the employees and staff
of `Client', families of young patients, and persons visiting
patients. The unavailability of any food stores within a

reasonable distance of Client' would make it very difficult, if not impossible forClient's' employees and staff to purchase
any such food items at any other place during working hours....

"At the present time, State of Florida sales taxes are
collected and remitted to the Department of Revenue on all sales
by the gift shop, including sales of potato chips, corn chips,
pretzels, nuts, popcorn, crackers and other food type items (the
`Food Items')....

"FAC Rule s. 12A-1.011(1)(a) provides that the sale of
potato chips, pretzels, corn chips, popcorn, peanuts and other
packaged nuts, crackers and other similar products are exempt
when sold at a grocery store or similar place of business, as
general grocery items, even though such items may be sold with
soft drinks or other items or whether such items are sold for
immediate consumption on or off the premises....

"Furthermore, FAC Rule s. 12A-1.011(22)(a) treats as a sale
exempt from the sales tax any food or beverage when served to
patients of any hospital (the `Hospital Exemption')....

"Furthermore, because many of the Food Items are purchased
by or for patients, the sale of Food Items by the gift shop
should also qualify for the Hospital Exemption...."

DETERMINATION

As correctly cited in your letter, Rule 12A-1.011(1)(a),
F.A.C., states that tax is not imposed on sales of general
grocery items when sold by grocery stores or like
establishments. Rule 12A-1.011(1)(a)1.a., F.A.C., specifically
identifies this exemption as applying towards sales of chips,
pretzels, nuts or crackers when such items are not chocolatecoated or candy-coated. The referenced passage further provides
that sales of candy, granola bars, chocolate-coated or candy
coated peanuts, chocolate coated or candy-coated pretzels,
chocolate-coated or candy-coated cookies, candied fruit,
crystallized fruit, glazed fruits, and preparations of fruits,
nuts or other ingredients in combination with chocolate, sugar,
honey, or other natural or artificial sweeteners are taxable

(e.g., sales of honey roasted nuts are subject to tax).

Rule 12A-1.011(3), F.A.C., provides in pertinent part:

"Food or beverages are subject to tax when served, prepared
or sold in or by restaurants; cafes; drugstores; lunch
counters; cafeterias; hotels, boarding houses and tourist
homes; amusement parks; racetracks; taverns, concession
stands at arenas, auditoriums, carnivals, fairs, stadiums,
theaters or other like places of business; or by any
business or place required by law to be licensed by the
Division of Hotels and Restaurants of the Department of
Business Regulations... Where a person who, in addition to
operating one of the aforementioned establishments, also
maintains a separate grocery department, no tax need be
collected on grocery department sales which are
specifically exempt provided separate records are
maintained; except, however, that items sold through the
grocery department in the same form and eating condition as
items sold from the menu at the eating establishment shall
be subject to tax."

A gift shop which does not contain a cafeteria or
restaurant type setting is not included among the establishments
enumerated in Rule 12A-1.011(3), F.A.C. Additionally, a gift
shop which is not required to be licensed by the Department of
Business and Professional Regulation is not one of the
establishments enumerated above. Therefore, assuming that
Client's gift shop does not qualify as one of the above
enumerated establishments, sales tax is not due on Client's
retail sales of potato chips, corn chips, pretzels, peanuts,
crackers, and cookies which are not chocolate-coated or candiedcoated. Regarding Client's sales of popcorn, please be advised
that caramel-coated popcorn is taxable. Additionally, as
contained in Rule 12A-1.011(5)(g), F.A.C., popcorn which is
popped on the seller's premises is taxable.

Please be advised that sales of the referenced items are
exempt as the sale of grocery items by a grocery store or like
establishment. The exemption afforded to hospitals on their
sales of food or beverages which are served as part of a meal to

patients is not applicable to purchases of taxable snack items
by patients from the gift shop.

The response issued herein is based upon the assumption
that the referenced gift shop sales of chips, pretzels, popcorn,
crackers, and nuts are not made through coin-operated vending
machines. As you know, such sales are taxable in accordance
with section 212.0515, F.S.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Betsy Turner
Tax Law Specialist

BT/
Control #13670